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Telecom regulation in the Netherlands

5 November 2014

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Agenda

• Introduction of ACM• Telecom trends and developments in NL• Telecom markets analysis• (Cable) television regulation in NL• Consuwijzer

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Introduction of ACM

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Introduction of ACM

• Autonomous Administrative Authority• Merged from 3 organisations in 2013 • Board of three:

– Chris Fonteijn (Chair)– Antia Vegter– Henk Don (telecom)

• ± 500 FTE

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Introduction of ACM

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ACM Strategy

• “ACM aims to create opportunities and options for consumers and businesses”

• Consumer welfare• Consumer awareness

Core values:

• Independence• Professionalism• Openness

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Telecom-related activities

• Registration of public electronic communication service operators, collecting fees

• Issuing phone number series• Telecom-specific consumer protection laws

(net neutrality, contract clauses, transparency, USD)• Dispute settlement (eg radio tower access, rights of way for

cable laying)• Market Analyses: SMP and access / tariff regulation

Not:• Frequency auctions, • Technical oversight, • Media act (any content)

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Telecom trends and developments in NL

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Networks• Mobile:

– Three 3G-networks – Already two national 4G-networks, two others are being rolled out

• Fixed: – 100% copper coverage: upgrading via pair bonding and vectoring– 95% cable coverage (households)– 30% FttH coverage (households)

30-6-2010 31-12-2010 30-6-2011 31-12-2011 30-6-2012 31-12-2012 30-6-2013 31-12-2013 30-6-2014

Homes connected (FttH) 569 658 768 918 1.078 1.303 1.512 1.832 1.994

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1.000

1.500

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,00

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Broadband: homes connected (FttH)

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UPC/Ziggo cable merger

European Commission recently approved merger, with some content remedies•UPC/Ziggo reaches 92% of NL households, significantly less businesses•Main competitor of KPN in most markets•EC: any risk of joint dominance is not due to merger

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Access to broadband internet

High-speed and basic broadband

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Broadband internet

• Market positions of KPN and merged UPC/Ziggo roughly similar

30-9-2012 31-12-2012 31-3-2013 30-6-2013 30-9-2013 31-12-2013 31-3-2014 30-6-2014CANALDIGITAAL - - - - - - [0 - 5%] [0 - 5%]KPN [40 - 45%] [40 - 45%] [40 - 45%] [40 - 45%] [40 - 45%] [40 - 45%] [40 - 45%] [40 - 45%]TELE2 [5 - 10%] [5 - 10%] [5 - 10%] [5 - 10%] [5 - 10%] [0 - 5%] [0 - 5%] [0 - 5%]T-MOBILE [0 - 5%] [0 - 5%] [0 - 5%] [0 - 5%] [0 - 5%] [0 - 5%] - -UPC [15 - 20%] [15 - 20%] [15 - 20%] [15 - 20%] [15 - 20%] [15 - 20%] [15 - 20%] [15 - 20%]ZIGGO [25 - 30%] [25 - 30%] [25 - 30%] [25 - 30%] [25 - 30%] [25 - 30%] [25 - 30%] [25 - 30%]Other [5 - 10%] [5 - 10%] [5 - 10%] [5 - 10%] [0 - 5%] [5 - 10%] [5 - 10%] [5 - 10%]

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Television

30-9-2012 31-12-2012 31-3-2013 30-6-2013 30-9-2013 31-12-2013 31-3-2014 30-6-2014

Analogue only 19% 19% 17% 16% 15% 14% 14% 13%

Digital and analogue 48% 47% 48% 49% 49% 50% 50% 51%

Digital only 33% 34% 35% 35% 36% 36% 36% 36%

0%

10%

20%

30%

40%

50%

60%

Shar

e of

sub

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ption

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Television: digitization of subscriptions

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Fixed telephony

• Migration from PSTN to VoB expected to slow down in 2015/2016

• Ongoing migration from ISDN2 to IP

• Migration from ISDN30 to IP just started

• Decrease in market volume dual and multiple

Single calls (PSTN)

Two calls (ISDN2) Multiple calls (ISDN30)

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Bundling

30-6-2011 31-12-2011 30-6-2012 31-12-2012 30-6-2013 31-12-2013 30-6-2014

Dual play - Broadband and fixed telephony 1.330 1.189 1.088 1.003 1.007 897 838

Dual play - Broadband and television 662 672 656 679 697 728 799

Dual play - Fixed telephony and television 89 105 90 98 99 101 91

Triple play + quadruple play 2.420 2.714 2.999 3.337 3.692 3.914 4.057

Total bundled subscriptions 4.500 4.680 4.833 5.118 5.496 5.640 5.785

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Num

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ipti

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(x 1

,000

)Multiplay: bundles offers based on multiple services billed together

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Mobile market

30-6-2012 30-9-2012 31-12-2012 31-3-2013 30-6-2013 30-9-2013 31-12-2013 31-3-2014

Minutes of traffic (x 1,000) 5.634.160 5.363.795 5.760.782 5.686.770 5.853.737 5.582.763 6.224.566 6.205.108

Data (x 1,000 MB) 5.331.243 5.932.102 6.749.284 7.215.930 7.761.576 8.727.345 10.274.603 11.588.649

SMS (x 1,000) 2.080.763 1.838.890 1.692.681 1.440.031 1.386.259 1.316.488 1.178.447 1.061.956

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volu

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x 1,

000,

000,

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Mobile: Volume retail minutes of traffic, data and sms (MNOs and MVNOs)

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Telecom markets analysis

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Market analysis

• Objectives:– Foster competition and investments– Promotion of consumer interest– Creation of internal market

• Analysis of telecom markets:– If SMP ACM imposes obligations:

• Access to least replicable network elements

– Process of market analysis:• Draft consulted nationally• Second draft notified with EC

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Local loop unbundling

Fixed telephony

Wholesale Fixed

telephony

WBT/ huurlijnen

Wholesale leased lines and HQ WBA

LQ WBAMultiple

Calls(ISDN 15>)

Single calls (PSTN)

Business connectivity services Internet Television

ODF-FttH/MDF/SDF Access

reta

il

dow

nstr

eam

w

hole

sale

ODF-FttO Access

Two calls(ISDN2)

Two calls(ISDN2)

Single calls(PSTN)

Mulitiple Calls

(ISDN15>)

Market 4: LLU

Market 5&6: WBA and WLL

Market 1&2: fixed telephony

Regulated

Not regulated

Light regulation

3rd round of market analysis

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LLU market analysis

• Retail markets:– Risk on single SMP KPN on fixed telephony and business

connectivity serivies– Risk on joint SMP KPN and UPC/Ziggo on internet

(including bundles)

• Wholesale market LLU:– Copper and FttH-access belong to market– Unbundled cable-access no substitute– KPN is owner of copper- and FttH-network and has to

grant access (including non-discrimination and tariff regulation)

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(Cable) Television regulation in NL

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First & second TV analysis – regulation

• 2006: – Separate market for cable TV– SMP regional cable operators– Access obligation for physical channel/frequency

• Not used: access seekers wanted cheap access to the cable operators commercial package of channels, or wanted to resell that package

• 2009:– Broad market with analogue and digital cable,

ADSL, FttH, satellite, terrestrial– Still SMP regional cable operators– Access obligation to resale analogue package

• Annulled by court in 2010

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Third TV analysis – no regulation

• 2011: same broad retail TV market• TV market no longer on EC list: three criteria

– High and non-transitory barriers to entry?– No development toward competition?– Other legislation will not solve problems?

• Conclusion: market does nog pass three criteria test, so no ex-ante regulation– Digital TV growing, making competition from other

infrastructures easier– Entry possible on DSL, FttH, resale DVB-T, and

threat from OTT services– KPN growing as strong competitor, cable shrinking

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Television distribution development NL

2006 2014

80-85% cable 60-65% cable

<1% IPTV-DSL 10-15% DSL-IPTV

10-15% satellite 5-10% satellite

0-5% terrestrial 5-10% terrestrial

5-10% FttH (IPTV, DVB-C, analogue)

>40 cable networks ±20 cable networks

KPN starting <5% KPN strong competitor 25-30%

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Current TV issues

• No new analysis, 2011 conclusion still holds– UPC/Ziggo merger does not change this– But politicians/competitors not happy, could request formal

analysis

• Discussions – Some HBBtv signals blocked by (all) TV operators– ‘Level playing field’ between OTT and broadcasting

services/providers– Possible regulations for search portals, EPG’s

• 2015: analysis of IP interconnection (peering)– The wholesale side of netneutrality– Issue is cost of OTT video (that competes with TV operators)

ConsuWijzer

Miranda Keijzer | November 2014

ConsuWijzer – how did we start?

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• 2006: Start of the Consumer Authority• Start of ConsuWijzer, as an Information service of 3 enforcement agency’s

• Two legs of consumer protection– Enforcement– Information Services

• Key to succes: Education & Insight in the markets

• 2008: switch to empowerment of consumers• 2010: First Government website-of-the-year award• 2013: merger of Nma, OPTA and CA to ACM

Organisation and ambition: two goals

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2014 ACM Conference – Innovation in Oversight, Oversight and Innovation

Facts & Figures

2.000.000 site visits 70.000 requests & signals

Customer Satisfaction: 7.3Readiness to take action: 46%

Empowerment

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Key principles in empowerment:

• We use easy-to-understand communication and give practical advice.

• Practical tools to reduce the barrier to really take action.

• Behavioral science

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Tone of voice

• Clear and understandable advice, in plain language

• To empower -> do it yourself• All advice contains an action plan• Do not pick a side!

It is not about what we say.., It is about what they understand!It is not about what we say.., It is about what they understand!

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Tools

• Webshop scan• Example letters• Checklists• Leaflets• Preparing conversations• Compare lists• Travel prices check• etc.

”if you snooze, you lose”

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• If consumers were more active, competition would increase, new entrants would be attracted, the increase in innovation would be supported, and the need for regulatory oversight would be reduced.

• In this campaign, we address and attempt to appeal to certain behavioral biases people naturally have. Examples are:– The Status quo bias– Loss aversion bias– Social preference

• General interest was high, our campaign received positive and widespread attention in major newspapers and on national television.

if you snooze, you lose

Best practices

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• Combine consumer advice with business intelligence

• Information services is an integrated proces, be involved at the start of an investigation

• Don’t think in legal areas but in consumer problems

• It is not about what we say, it is what they understand

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Questions?Thank you for your attention